Fitch cuts Alcoa to "junk" status
NEW YORK, April 11 (IFR) - Fitch Ratings cut aluminum maker Alcoa to "junk" status on Friday, citing expectations that the company's leverage will remain above that required for an investment-grade ranking.
The ratings agency cut the issuer to BB+ from BBB- with a stable outlook.
Alcoa is rated BBB- by S&P, the lowest investment-grade rating, and Ba1 by Moody's.
Fitch said the company's profitability has been hampered by global oversupply in aluminum.
"The downgrade reflects Fitch's view that financial leverage will remain above 2.5x on a total debt/EBITDA level and above 3.5x on an FFO adjusted level through 2014," Fitch said.
"Significant pension contributions will keep FFO adjusted leverage above 3.5 through 2015. The company has generated free cash flow after capital expenditures and dividends to shareholders since 2010 despite weak aluminum prices."
(Reporting by Natalie Harrison; Editing by Mariana Santibanez)
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